NIRMAL KUMAR PARSANversusCOMMISSIONER OF COMMERCIAL TAXES & ORS.

1132                       [2020]
                SUPREME COURT     1 S.C.R. 1132
                               REPORTS                      [2020] 1 S.C.R.


 A                        NIRMAL KUMAR PARSAN
                                         v.
            COMMISSIONER OF COMMERCIAL TAXES & ORS.
                          (Civil Appeal No. 7863 of 2009)
 B                             JANUARY 21, 2020
        [A. M. KHANWILKAR AND DINESH MAHESHWARI, JJ.]
              West Bengal Sales Tax Act, 1954 – West Bengal Sales Tax
       Act, 1994 – Sale of goods imported from foreign country and after
       unloading the same on the land-mass of the State kept in the bonded
 C
       warehouse without payment of customs duty to foreign bound ships
       as “ship stores” – Amenable to sales tax or not – The Tribunal held
       that the sale had taken place on the land-mass of the State and the
       sale was neither for import nor for export and rejected the claim of
       the appellants for exemption – The High Court upheld the view of
 D     the Tribunal – Before the Supreme Court, the appellants contended
       that the process of import was not complete at the time of sale of the
       goods in question to the foreign-going ship and the transaction of
       sale was “in the course of import”, for which reason it was not
       amenable to sales tax – Held: A priori, for a sale or purchase to
       qualify as a sale or purchase in course of import, the essential
 E
       conditions are that such sale shall occur before the goods had
       crossed the customs frontiers of India and the import of the goods
       must be effected or the import is occasioned due to such sale or
       purchase – In the instant case, the sales in question did not occasion
       import – The stated sales or appropriation of goods kept in bonded
 F     warehouse within the land-mass/ territory of the State of West Bengal
       are neither in the course of import or export and more so, were
       effected beyond the customs port/ land customs station area –
       Therefore, in law, it was a sale amenable to levy of sales tax under
       the 1954 Act and the 1994 Act, as the case may be, r/w. s. 4 of the
       CST Act – There is no infirmity in the view taken by the authorities
 G
       below and which had justly commended to the High Court – Central
       Sales Tax Act, 1956 – s.5 r/w. s.2(ab)
             Dismissing the appeals, the Court
             HELD: 1. The sale to be in the course of import, must be a
 H     sale of goods and as a consequence of such sale, the goods must
                                       1132
      NIRMAL KUMAR PARSAN v. COMMISSIONER OF                           1133
             COMMERCIAL TAXES & ORS.

actually be imported within the territory of India and further, the    A
sale must be part and parcel of the import so as to occasion import
thereof. Indeed, for the purposes of Customs Act, only upon
payment of customs duty the goods are cleared by the Customs
authorities whence import thereof can be regarded as complete.
However, that would be no impediment for levy of sales tax by
                                                                       B
the State concerned in whose territory the goods had already
landed/unloaded and kept in the bonded warehouse. For seeking
exemption, it is necessary that the goods must be in the process
of being imported when the sale occurs or the sale must occasion
the import thereof within the territory of India. The word
“occasion” is used to mean “to cause” or “to be the immediate          C
cause of”. In the present case, the stated sales in no way
occasioned import of the goods into the territory of India. For,
the goods were taken away by the foreign-going ship as ship stores
for being consumed after the goods had crossed the customs
frontiers/Indian Waters. [Para 12][1148-D-F]
                                                                       D
      2. Indubitably, the sale which is to be regarded as exempt
from payment of sales tax, is a sale which causes the import to
take place or is the immediate cause of the import of goods. The
appellants having failed to establish that the stated goods would
be actually imported within the territory of India and had not
crossed the customs station, cannot contend that the sale was in       E
the course of import as such within the meaning of Section 5 read
with Section 2(ab) of the Central Sales Tax Act, 1956. Moreover,
there is no direct linkage between the import of the goods and
the sale in question to qualify as having been made in the process
or progress of import.[Para 13][1148-G-H; 1149-A]                      F
      3. In the present case, it is not the case of the appellant
that the goods in question were being exported. Since the goods
are to be consumed on the board of the foreign going ship and
the same would be consumed before reaching a destination, it
does not fall under the definition of ‘export’. The sale cannot        G
qualify as a sale occasioning export unless the goods reach a
destination which is a place outside India. Further, since the goods
have been sold from the bonded warehouse and had crossed the
customs port/land customs station prior to their sale, it cannot

                                                                       H
1134            SUPREME COURT REPORTS                       [2020] 1 S.C.R.


 A     qualify as a sale in course of export within the meaning of Section
       5(1) read with Section 2(ab) of the CST Act. [Para 24][1156-F-G]
              4. In regard to the contention that declaration under Section
       69 of the Customs Act was made by the appellant, there is nothing
       on record to show that such declaration was made in respect of
 B     the goods pertaining to subject sale(s). Even otherwise, the benefit
       extended under the Customs Act of waiver of customs duty cannot
       be taken as waiver of sales tax under the relevant state and central
       laws. Similarly, insertion of sub-Section (3) in Section 5 of the
       CST Act in 1976 does not affect these cases because the bonded
       warehouse where the stated sales or appropriation of the goods
 C     occurred is within the land-mass of the State of West Bengal and
       not shown to be within the customs station area. [Para 25][1156-
       H; 1157-A-B]
             5. A priori, it must be held that the stated sales or
       appropriation of goods kept in bonded warehouse within the land-
 D     mass/territory of the State of West Bengal are neither in the
       course of import or export and more so, were effected beyond
       the customs port/land customs station area. Therefore, in law, it
       was a sale amenable to levy of sales tax under the 1954 Act and
       the 1994 Act, as the case may be, read with Section 4 of the CST
 E     Act. As a result, these appeals must fail, as we find no infirmity in
       the view taken by the authorities below and which had justly
       commended to the High Court. [Para 26][1157-C]
             K. Gopinathan Nair and Ors. v. State of Kerala (1997)
             10 SCC 1 : [1997] 3 SCR 226; Md. Serajuddin and
 F           Ors. v. State of Orissa (1975) 2 SCC 47 : [1975] 0 Suppl.
             SCR 169 – relied on
             J.V. Gokal & Co. (Private) Ltd. v. Assistant Collector of
             Sales-Tax (Inspection) & Ors. [1960] 2 SCR 852;
             Indian Tourist Development Corporation Limited v.
 G           Assistant Commissioner of Commercial Taxes & Anr.
             (2012) 3 SCC 204 : [2012] 1 SCR 808 – inapplicable.
             M/s. Ranjit Shipping Pvt. Ltd. & Anr. v. State of West
             Bengal & Ors. (1980) SCC Online Cal 141 : (1980) 2

 H
     NIRMAL KUMAR PARSAN v. COMMISSIONER OF                     1135
            COMMERCIAL TAXES & ORS.

     CHN 192; Madras Marine and Co. v. State of Madras          A
     (1986) 3 SCC 552 : [1986] 3 SCR 236; State of
     Travancore-Cochin & Ors. v. Shanmugha Vilas Cashew
     Nut Factory, Quilon & Ors. [1954] SCR 53; Minerals
     & Metals Trading Corporation of India Ltd. v. Sales
     Tax Officer & Ors. (1998) 7 SCC 19 : [1998] 2 Suppl.
                                                                B
     SCR 112; State of Kerala & Ors. v. Fr. William
     Fernandez & Ors. (2017) SCC Online SC 1291 : (2017)
     12 SCALE 463; Coffee Board, Bangalore v. Joint
     Commercial Tax Officer, Madras & Anr. (1969) 3 SCC
     349 : [1970] 3 SCR 147; Commissioner of Customs
     (Import), Mumbai v. Dileep Kumar and Company & Ors.        C
     (2018) 9 SCC 1 : [2018] 7 SCR 1191; Burmah Shell
     Oil Storage and Distributing Co. of India Ltd. & Anr. v.
     Commercial Tax Officer & Ors. [1961] 1 SCR 902; Kiran
     Spinning Mills v. Collector of Customs (2000) 10 SCC
     228; State of Kerala & Ors. v. Cochin Coal Company
                                                                D
     Ltd. [1961] 2 SCR 219; Fairmacs Trading Co. v. The
     State of Andhra Pradesh (1975) 36 STC 260 (AP);
     Fairmacs Trading Co. v. The State of Tamil Nadu (1978)
     41 STC 157 (Mad) – referred to.
                     Case Law Reference
                                                                E
[1986] 3 SCR 236             referred to            Para 4
[1960] 2 SCR 852             inapplicable           Para 7
[1954] SCR 53                referred to            Para 7
[1998] 2 Suppl. SCR 112      referred to            Para 7      F
[2012] 1 SCR 808             inapplicable           Para 7
[1970] 3 SCR 147             referred to            Para 7
[2018] 7 SCR 1191            referred to            Para 8
[1961] 1 SCR 902             referred to            Para 8      G
(2000) 10 SCC 228            referred to            Para 8
[1961] 2 SCR 219             referred to            Para 11
[1997] 3 SCR 226             relied on              Para 18
[1975] 0 Suppl. SCR 169      relied on              Para 22     H
1136            SUPREME COURT REPORTS                          [2020] 1 S.C.R.


 A           CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7863
       of 2009.
             From the Judgment and Order dated 16.08.2007 of the High Court
       at Calcutta in W.P.T.T. No. 5 of 2007.
                                         With
 B
             Civil Appeal No. 7864 of 2009.
             Siddharth Bhatnagar, Sr. Adv., Joydeep Mazumdar, Dhruv Surana,
       Ms. Shalini Kaul, Advs. for the Appellant.
             Ms. Madhumita Bhattacharjee, Ms. Urmila Kar Purkayastha,
 C     Advs. for the Respondents.
             The Judgment of the Court was delivered by
             A. M. KHANWILKAR, J.
              1. The principal question involved in these appeals is whether the
 D     subject sales (of goods imported from foreign country and after unloading
       the same on the land-mass of the State of West Bengal, kept in the
       bonded warehouse without payment of customs duty) to foreign bound
       ships as “ship stores” can be regarded as sale within the territory of the
       State and amenable to sales tax under the West Bengal Sales Tax Act,
       1954 (for short, ‘the 1954 Act’) or the West Bengal Sales Tax Act, 1994
 E     (for short, ‘the 1994 Act’).
             2. The admitted factual position in the present cases is that after
       importing foreign made cigarettes, the appellants stored the same in the
       customs bonded warehouse within the land-mass of the State of West
       Bengal and some of those articles were sold to the Master of a foreign-
 F     going ship as ship stores, without payment of customs duty. Those goods
       were escorted to the stated ship under the supervision of the officials of
       the Customs authority.
             3. These appeals take exception to the judgment and order of the
       High Court at Calcutta (for short, ‘the High Court’), dated 16.8.2007 in
 G     W.P.T.T. Nos. 5/2007 and 6/2007 respectively, whereby it had upheld
       the decision of the West Bengal Taxation Tribunal (for short, ‘the
       Tribunal’) that the stated sales were within the territory of the State of
       West Bengal and amenable to sales tax.
             4. Civil Appeal No. 7863/2009 emanates from the assessment
 H     order passed by the Commercial Tax Officer, West Bengal, dated
        NIRMAL KUMAR PARSAN v. COMMISSIONER OF                                  1137
      COMMERCIAL TAXES & ORS. [A. M. KHANWILKAR, J.]

13.3.1985 pertaining to assessment period – 1.4.1980 to 31.3.1981. The          A
assessing officer rejected the claim for exemption from payment of sales
tax in respect of the stated sales of imported cigarettes from the stock,
as the cigarettes were sold to outgoing vessels from the bonded
warehouse within the land-mass of the State of West Bengal following
the decision of the High Court in M/s. Ranjit Shipping Pvt. Ltd. &
                                                                                B
Anr. vs. State of West Bengal & Ors.1. The authority found that it was
not a sale in the course of import as claimed by the assessees (appellants).
The appellants unsuccessfully carried the matter in appeal and finally in
revision before the Tribunal, which came to be rejected on 30.3.2007.
Before the revisional authority, the only contention pursued was that
there was no sale within the State of West Bengal or even in India              C
because the buyer had no right to consume the goods before the ship
crossed the territorial Waters of India. It was urged by the appellants
before the revisional authority that the process of import was not complete
at the time of sale to the foreign-going ship and the transaction was a
sale in the course of import. Resultantly, the sold goods were not taxable
                                                                                D
under the concerned West Bengal Sales Tax laws because the goods
never entered the local area of the State of West Bengal, crossing the
customs frontiers of India as defined in Section 2(ab) of the Central
Sales Tax Act, 1956 (for short, ‘the CST Act’). The Tribunal, however,
held that the sale had taken place on the land-mass of the State of West
Bengal and the sale was neither for import nor for export. The Tribunal         E
essentially relied upon the exposition in Madras Marine and Co. vs.
State of Madras2 to reject the revision filed by the appellants being
devoid of merits. Feeling aggrieved, the appellants carried the matter to
the High Court by way of a writ petition being W.P.T.T. No. 5/2007,
which came to be rejected by the Division Bench of the High Court
                                                                                F
whilst upholding the view taken by the Tribunal as just and proper.
      5. Civil Appeal No. 7864/2009 emanates from the order dated
22.10.2003 passed by the Assistant Commissioner of Commercial Taxes
under Section 65 of the 1994 Act pertaining to assessment periods –
1.4.1999 to 31.3.2000, 1.4.2000 to 31.3.2001, 1.4.2001 to 31.3.2002 and
1.4.2002 to 31.3.2003. The claim of the appellants that the sales in question   G
were in the course of import on high seas and no sales tax was payable
thereon came to be rejected. The authority answered the claim as
follows:-
1
    1980 SCC Online Cal 141 : (1980) 2 CHN 192
2
    (1986) 3 SCC 552                                                            H
1138            SUPREME COURT REPORTS                            [2020] 1 S.C.R.


 A           “…..
             All the judicial edicts relevant and referred to were perused and
             the documents produced by the dealer were examined. His
             Lordship Hon’ble West Bengal Taxation Tribunal passed the
             judgment after considering all the grounds taken by the dealer
 B           including the one for the position of the law after introduction of
             the section 2(ab) in Central Sales Tax Act. His Lordship
             Honourable High Court of Kolkata did not express even a mite of
             doubt in the correctness of the impugned order of the Hon’ble
             Tribunal. The order was remanded for quantification of sales in
             dispute. It was observed that, of the total goods imported and
 C           stored only a portion was taken out for sale to master of a particular
             ship. From the same warehouse goods for sales to local persons
             also were taken. So the sold goods could not have been ascertained
             and appropriate before those were taken out of the bonded
             warehouse. The risk in the goods was transferred at that time
 D           and at that place only. It might have so happened that the Customs
             authority took custody of the goods for preventing loss of its own
             revenue. No such sale could have been one in the course of
             import because the sale did not occasion the import. None
             of those was export because the goods were not supposed
             to enter into the territory of another country in the form
 E           those were dispatched. The analogy of sales from duty-free
             shops was irrelevant. For, it always remains on the other
             side customs frontier and so the risk is transferred before
             crossing of the frontier.
             Thus there was no gainsay that sales of goods to masters of ships
 F           were sales in the state and were taxable. The dealer was asked
             to pay tax on such sales and revise the return for the years yet to
             be assessed. The assessing authority was requested to revise if
             necessary, assessments not impugned. The appellate and revisional
             authorities were requested to treat the tax payable on such sale
 G           as admitted one.
             …..”                                            (emphasis supplied)
             6. Feeling aggrieved, the appellants resorted to revision before
       the Tribunal, which came to be rejected following the decision of the

 H
      NIRMAL KUMAR PARSAN v. COMMISSIONER OF                                   1139
    COMMERCIAL TAXES & ORS. [A. M. KHANWILKAR, J.]

Tribunal passed on the same date i.e. 30.3.2007 in case of the companion       A
appeal. The appellant carried the matter by way of a writ petition being
W.P.T.T. No. 6/2007 before the High Court, which came to be dismissed
by the High Court, upholding the decision of the authority, which had
held that the sales in question would be amenable to sales tax under the
1994 Act.
                                                                               B
        7. The thrust of the argument of the appellants in these appeals is
that the process of import was not complete at the time of sale of the
goods in question to the foreign-going ship and the transaction of sale
was “in the course of import”, for which reason it was not amenable to
sales tax and in fact, the State would have no authority to levy such tax.
To buttress this submission, reliance was placed on Article 286 of the         C
Constitution of India providing for restrictions as to imposition of tax on
the sale or purchase of goods and on Section 5 of the CST Act, in particular
sub-Section (2) thereof, to contend that the sales in question shall be
deemed to have taken place in the course of import of goods in the
territory of India. Reliance was placed on the Constitution Bench decision     D
of this Court in J.V. Gokal & Co. (Private) Ltd. vs. Assistant Collector
of Sales-Tax (Inspection) & Ors.3, which had followed the exposition
in State of Travancore-Cochin & Ors. vs. Shanmugha Vilas Cashew
Nut Factory, Quilon & Ors.4. Relying on the definition of expression
“crossing the customs frontiers of India” in Section 2(ab) of the CST
Act, of “customs area” in Section 2(11) and of “customs station” in            E
Section 2(13) of the Customs Act, 1962 (for short, ‘the Customs Act’),
it was urged that crossing the customs frontiers means crossing the
limits of the customs station including crossing the area in which imported
goods or exported goods are ordinarily kept before the clearance by the
Customs authorities. Reliance was also placed on the decision in Minerals      F
& Metals Trading Corporation of India Ltd. vs. Sales Tax Officer
& Ors.5, which has had occasion to construe Section 5 of the CST Act.
It was then urged that the goods in question were kept for warehousing
and a declaration was given by the appellants that the said goods would
be exported to foreign-going vessels as ship stores in terms of Section
88 of the Customs Act. The appellants have adverted to Sections 69, 85         G
and 88 of the Customs Act to contend that the stated goods could be
exported to a place outside India without payment of import duty and
3
  (1960) 2 SCR 852 : AIR 1960 SC 595
4
  (1954) SCR 53 : AIR 1953 SC 333
5
  (1998) 7 SCC 19
                                                                               H
1140             SUPREME COURT REPORTS                            [2020] 1 S.C.R.


 A     until import duty was paid, the import thereof cannot be said to be
       complete. Reliance was then placed on the decision in Indian Tourist
       Development Corporation Limited vs. Assistant Commissioner of
       Commercial Taxes & Anr.6, which according to the appellants, applied
       on all fours, as even in that case, the goods were kept in the bonded
       warehouses and then supplied to duty-free shops, which transaction has
 B
       been extricated from the applicability of sales tax payable to the State
       on the ground that the goods had not crossed the customs frontiers and
       the sale was deemed to have taken place in the course of import of
       goods into the territory of India. According to the appellants, the finding
       recorded by the authorities below which commended to the High Court,
 C     was completely in the teeth of the aforesaid decision. The appellants
       have distinguished the decision in Madras Marine (supra) on the premise
       that in that case the goods were intended for re-export only and in that
       context, it was held that there was a necessity of a destination in a
       foreign country. Moreover, the said decision has not considered the
       efficacy of Section 2(ab) of the CST Act nor noticed the dictum in J.V.
 D
       Gokal (supra), which dealt with the case of import/‘in the course of
       import’. It was urged that the decision in J.V. Gokal (supra) had been
       followed in a recent decision in State of Kerala & Ors. vs. Fr. William
       Fernandez & Ors.7. It was further urged that the dictum in Coffee
       Board, Bangalore vs. Joint Commercial Tax Officer, Madras &
 E     Anr.8 is distinguishable and inapplicable to the fact situation of the present
       case and more so, may have no bearing after the amendment of 1976 to
       Section 5 by insertion of sub-Section (3) therein, which opens with non-
       obstante clause and provides that the last sale or purchase of any goods
       preceding the sale or purchase occasioning the export of those goods
       out of the territory of India, shall also be deemed to be in the course of
 F
       such export, if such last sale or purchase took place after and was for
       the purpose of complying with the agreement or order for or in relation
       to such export. Emphasis was placed on the objects and reasons of the
       Amendment Act. In substance, it was urged that the stated sales were
       in the course of import and could not be subjected to levy of sales tax by
 G     the State under the State legislation.
             8. Per contra, the respondents would urge that the authorities had
       considered all aspects of the matter and after due evaluation of the
       6
         (2012) 3 SCC 204
       7
         2017 SCC Online SC 1291 : (2017) 12 SCALE 463
 H     8
         (1969) 3 SCC 349
        NIRMAL KUMAR PARSAN v. COMMISSIONER OF                                1141
      COMMERCIAL TAXES & ORS. [A. M. KHANWILKAR, J.]

evidence before it, justly concluded that the stated sales were neither in    A
the course of import nor export and had taken place on the land-mass of
the State of West Bengal and thus, amenable to sales tax under the 1954
Act and the 1994 Act, as the case may be. It was urged that it is an
admitted position that the goods were kept in bonded warehouses on the
land-mass of the State of West Bengal and were sold to the Master of a
                                                                              B
foreign-going ship as ship stores thereat. It was urged that the expression
“crossing the customs frontiers of India” has already been defined in the
CST Act and limits its application to area of a “customs station”, as
defined in the Customs Act to mean any customs port, customs airport
or land customs station. In other words, the expression “crossing the
customs frontiers of India” is exhaustive and would not include the bonded    C
warehouses, where the stated goods were kept to be sold to the Master
of a foreign-going ship as ship stores. It was urged that being a taxation
statute, strict interpretation should be offered to this definition as
expounded in Commissioner of Customs (Import), Mumbai vs. Dileep
Kumar and Company & Ors.9. It was further urged that the stated
                                                                              D
sales of goods by no stretch of imagination can qualify the expression
“in the course of import of goods into the territory of India”, as is
contended by the appellants. For that, the goods must actually be imported
into the territory of India and sale must be a single sale, which itself
causes the import or is in the progress or process of import. It was urged
that the authorities had rightly opined that there was sale within the        E
State of West Bengal; whilst rejecting the claim of the appellant(s) that
merely because buyer had no right to consume the goods in question
before the ship had crossed the territorial Waters of India, that would
make no difference because the sale was complete by appropriation of
the goods in the bonded warehouse itself. Similarly, the fact that customs
                                                                              F
duty was not paid on the stated goods would be of no consequence. It
was urged that the appellants have, for the first time, raised a new plea
that they had filed declaration. No such plea was taken before the
concerned authority nor any document or evidence was produced in
support thereof for the relevant assessment period(s). The appellants,
therefore, cannot be permitted to pursue this contention. Thus, the appeals   G
be confined to the plea taken before the authorities below that the stated
sales were not effected within the territory of the State of West Bengal
or in India. The respondents have placed reliance on the decisions in
Burmah Shell Oil Storage and Distributing Co. of India Ltd. & Anr.
9
    (2018) 9 SCC 1                                                            H
1142                SUPREME COURT REPORTS                        [2020] 1 S.C.R.


 A     vs. Commercial Tax Officer & Ors. 10, Coffee Board (supra) and
       Madras Marine (supra) to contend that the issue is answered against
       the appellants. The respondents have distinguished the decision relied
       upon by the appellants in Indian Tourist Development Corporation
       (supra). It was urged that the doctrine of Unbroken Package evolved by
       American Courts has no application in India, as expounded in Fr. William
 B
       Fernandez (supra). It was thus urged that the taxable event had occurred
       on the appropriation of goods at the bonded warehouse itself, which was
       within the territory of the State of West Bengal. To buttress this
       submission, reliance was placed on Kiran Spinning Mills vs. Collector
       of Customs11, wherein it has been held that the taxable event would be
 C     the day of crossing of customs barrier and not the date when the goods
       landed in India or had entered the territorial Waters. The respondents
       would urge that the appeals are devoid of merits and be accordingly
       dismissed.
             9. We have heard Mr. Siddharth Bhatnagar, learned senior counsel
 D     and Mr. Joydeep Mazumdar, learned counsel appearing for the appellants
       and Ms. Madhumita Bhattacharjee, learned counsel appearing for the
       respondents.
               10. As noticed from the finding of fact recorded by the authorities,
       it is not in dispute that after importing the stated goods, the appellants
 E     stored the same in the bonded warehouse within the land-mass of the
       State of West Bengal and some of the articles were then sold to the
       Master of a foreign-going ship as ship stores, without payment of customs
       duty thereon. The question is: whether the sales in question would qualify
       the expression “sale in the course of import”? The phrase “sale in the
       course of import” would constitute three essential features – (i) that
 F     there must be a sale; (ii) that goods must actually be imported and (iii)
       that the sale must be part and parcel of the import. The factual matrix in
       the present case clearly depicts that the sales in question would not
       cause import of the stated goods. Instead, it would result in taking away
       the goods (after being unloaded on the land-mass of the State of West
 G     Bengal) on the ongoing ship as ship stores outside the territory of Indian
       Waters for being consumed on the ship and not for export to another
       destination as such. The appellants have advisedly not pursued the
       argument that the stated sales would result in an export or would be in
       10
            (1961) 1 SCR 902 : AIR 1961 SC 315
       11
 H          (2000) 10 SCC 228
       NIRMAL KUMAR PARSAN v. COMMISSIONER OF                                   1143
     COMMERCIAL TAXES & ORS. [A. M. KHANWILKAR, J.]

the course of export. For, such argument has been rejected by this Court        A
in Madras Marine (supra).
       11. Concededly, the principle underlying the exposition in the above
referred reported decision would apply proprio vigore for considering
the argument as to whether the stated sales can be regarded as sale in
the course of import as such. The two-Judge Bench in Madras Marine              B
(supra) had considered the decision of Constitution Bench in Burmah
Shell (supra). The Court noted the dictum of the Constitution Bench to
the effect that in order to exclude the taxation by the State, the appellants
had to prove that there was some other State, where the goods could be
said to have been delivered as a direct result of the sale for the purpose
of consumption in that other State and as they failed to do so, the goods       C
loaded on board of an aircraft for consumption though taken out of India,
was not export since it had no destination, where it can be said to have
been imported and so long as it did not satisfy that test, it could not be
said that the sale was in the course of export. Besides noticing this
dictum of the Constitution Bench, the Court also adverted to the decision       D
in State of Kerala & Ors. vs. Cochin Coal Company Ltd. 12, wherein it
was held that the concept of export in Article 286(1)(b) of the Constitution
postulates the existence of two termini as those between which the goods
were intended to move or between which they were intended to be
transported and not a mere movement of goods out of the country without
any intention of their being landed in specie in some foreign port.             E
Additionally, the Court also extensively adverted to the decision of the
Andhra Pradesh High Court in Fairmacs Trading Co. vs. The State of
Andhra Pradesh13 and approved the same dealing with the similar
argument. The Court also noted and approved the decision of the Madras
High Court in Fairmacs Trading Co. vs. The State of Tamil Nadu14.               F
The Court in paragraphs 19 to 21 and 25 to 28 observed as under:-
       “19. The correct position, so far as the facts of the present case
       are concerned, in our opinion, has been laid in the decision of
       Burmah Shell Oil Storage and Distributing Co. of India Ltd. v.
       C.T.O. This Court observed at page 781 as follows:                       G
          “While all exports involved a taking out of the country,
          all goods taken out of the country cannot be said to be
12
   (1961) 2 SCR 219 : AIR 1961 SC 408
13
   (1975) 36 STC 260 (AP)
14
   (1978) 41 STC 157 (Mad)                                                      H
1144      SUPREME COURT REPORTS                             [2020] 1 S.C.R.


 A        exported. The test is that the goods must have a foreign
          destination where they can be said to be imported. It
          matters not that there is no valuable consideration from the
          receiver at the destination end. If the goods are exported
          and there is sale or purchase in the course of that export
          and the sale or purchase occasions the export to a foreign
 B
          destination, the exemption is earned. Purchases made by
          philanthropists of goods in the course of export to foreign
          countries to alleviate distress there, may still be exempted, even
          though the sending of the goods was not a commercial venture
          but a charitable one. The crucial fact is the sending of the
 C        goods to a foreign destination where they would be
          received as imports.”
       20. The appellants in that case dealt in petroleum and petroleum
       products and carried on business at Calcutta. They had maintained
       supply depots at Dum Dum Airport from which aviation spirit
 D     was sold and delivered to aircraft proceeding abroad for their
       consumption. The question was whether these supplies to the
       aircraft which proceeded to foreign countries were liable to sales
       tax under the Bengal Motor Spirit Sales Taxation Act, 1941. The
       contention of the appellants in that case was that such sales were
       made in the course of export of such aviation spirit out of the
 E     territory of India, that they took place outside the State of West
       Bengal, that inasmuch as aviation spirit was delivered for
       consumption outside West Bengal, the sales could not fall within
       the Explanation to clause (1)(a) of Article 286 as it then stood. It
       was held by this Court that in order to exclude the taxation by the
 F     State of West Bengal, the appellants had to prove that there was
       some other State where the goods could be said to have been
       delivered as a direct result of the sale for the purpose of
       consumption in that other State and that as they failed to do so,
       the aviation spirit loaded on board an aircraft for consumption
       though taken out of India, was not exported since it had no
 G     destination, where it could be said to be imported and so long as it
       did not satisfy that test, it could not be said that the sale was in the
       course of export. It was further held that aviation spirit was sold
       for the use of aircraft and the sale was not even for the purpose
       of export and all the elements of sale including delivery and payment
 H     of price took place within the State of West Bengal and the sales
       were complete within the territory of that State. The customs
  NIRMAL KUMAR PARSAN v. COMMISSIONER OF                                 1145
COMMERCIAL TAXES & ORS. [A. M. KHANWILKAR, J.]

  barrier did not set a terminal limit to the territory of West Bengal   A
  for sales tax purpose. The sale beyond the customs barrier was
  still a sale in fact in the State of West Bengal.
  21. The ratio of this decision would be applicable to the facts and
  circumstances of this case. It was rightly urged that the
  appropriation of goods took place in the State of Tamil Nadu when      B
  the goods were segregated in the bonded warehouse to be
  delivered to the foreign going vessels. It was not a case of export
  as there was no destination for the goods to a foreign country.
  The sale was for the purpose of consumption on board the ship. It
  was not as if only on delivery on board the vessel that the sale
  took place. The mere fact that shipping bill was prepared for          C
  sending it for custom formalities which were designed to effectively
  control smuggling activities could not determine the nature of the
  transaction for the purpose of sales tax nor does the circumstances
  that delivery was to the captain on board the ship within the
  territorial waters make it a sale outside the State of Tamil Nadu.     D
            xxx                       xxx                       xxx
  25. In the case before the Andhra Pradesh High Court in Fairmacs
  Trading Company v. State of A.P., the petitioner imported ship-
  stores from foreign countries, kept these in bonded warehouses
  of the customs department without the levy of customs duty and         E
  later on sold and delivered to ships’ masters for consumption abroad
  the ship after crossing the port boundaries. On the question whether
  the sales were outside the State or in the course of export and
  therefore not liable to tax under the Andhra Pradesh General Sales
  Tax Act, 1957, it was observed by the Andhra Pradesh High Court        F
  that the goods were specific and ascertained and were within the
  State when the contract of sale took place and therefore the
  requirements of Section 4(2)(a) of the Central Sales Tax Act,
  1956 were fully satisfied and the sales must be said to have taken
  place inside the State; but as the goods sold were meant for
  consumption during voyage and they had no destination in any           G
  foreign country where they could be received as imports, the sales
  were not sales in the course of exports. It was further held that
  mere movement of goods out of the country following a sale would
  not render the sale, one in the course of export within Article
  286(1)(b) of the Constitution of India. Before a sale can be said
                                                                         H
1146      SUPREME COURT REPORTS                            [2020] 1 S.C.R.


 A     to be a sale in the course of export, the existence of two termini
       between which the goods are intended to move or to be transported
       is necessary.
       26. The Madras High Court in the case of Fairmacs Trading
       Co. v. State of T.N. was dealing with an assessee, who was a
 B     dealer in ship’s stores and was also doing business as ship chandlers
       and who imported goods from abroad for the purpose of supplying
       them either to foreign-going vessels or to diplomatic personnel.
       These goods were received and kept in the customs bonded
       warehouse and were cleared under the supervision of the customs
       authorities whenever these were sold by the assessee. In respect
 C     of supplies of specific goods made to certain ships located in the
       Madras harbour, pursuant to orders placed by the Master of the
       ship or other officers working in the ship, the transportation of the
       goods to the ship was effected in such a manner as to ensure that
       the bonded goods, which had not paid any duty, did not enter the
 D     local market. The delivery receipt sent along with the goods by
       the assessee was signed by an officer of the ship in token of
       having received the goods in good condition. The question that
       arose for consideration was whether the sale took place within
       the State of Tamil Nadu and liable to be taxed under the Tamil
       Nadu General Sales Tax Act, 1959. It was held (i) that there was
 E     nothing to show in the communications from the ship that the
       goods had necessarily to be supplied only in the ship. It was open
       to the officers working in the ship to come and take delivery of
       the goods in which event the sale would be a local sale. Therefore,
       assuming that the territorial waters did not form part of the State
 F     of Tamil Nadu, as there was nothing in the contemplation of the
       contracting parties that the goods were to be moved from one
       State to another, it was held that it was not possible to take the
       view that the sales were inter-State sales; and (ii) that the assessee
       was not selling specific or ascertained goods, because the goods
       formed part of a larger stock within the bonded warehouse and
 G     had, therefore to be separated and appropriated to the contract as
       and when orders were placed by the officers of the ship by
       description. Therefore, the sales were local sales in view of the
       specific provision of Section 4(2)(b) of the Central Sales Tax Act,
       1956, read with Section 2(n), Explanation 3 of the Act (Tamil
 H     Nadu General Sales Tax Act, 1959), and were accordingly taxable
    NIRMAL KUMAR PARSAN v. COMMISSIONER OF                                   1147
  COMMERCIAL TAXES & ORS. [A. M. KHANWILKAR, J.]

      under the Act. The court did not find it necessary to consider the     A
      question whether the territory covered by the territorial waters
      formed part of the State of Tamil Nadu or not.
      27. Attention of the Madras High Court was drawn to the decision
      of Andhra Pradesh High Court in Fairmacs Trading Co. v. State
      of A.P. The Madras High Court did not examine the question in          B
      detail in the view it took.
      28. In so far as the High Courts of Andhra Pradesh and Madras
      in the said two decisions held that sales took place within the
      State, we are in agreement.”
                                                     (emphasis supplied)     C

The Court finally concluded in paragraphs 36 and 37 as follows:-
      “36. The short question, therefore, that arises in all these matters
      is whether sale of the goods in question took place within the
      territory of Tamil Nadu. In these cases sale took place by             D
      appropriation of goods. Such appropriation took place in bonded
      warehouse. Such bonded warehouses were within the territory
      of State of Tamil Nadu. Therefore, under sub-section (2), sub-
      clauses (a) and (b) of section 4 of the Central Sales-Tax Act,
      1956, the sale of goods in question shall be deemed to have taken
      place inside the State because the contract of sale of ascertained     E
      goods was made within the territory of Tamil Nadu and furthermore
      in case of unascertained goods appropriation had taken place in
      that State in terms of clause (b) of sub-section (2) of section 4 of
      the Central Sales Tax Act, 1956. There is no question of sale
      taking place in course of export or import under section               F
      5 in this case. From that point of view the amendment
      introduced by Act 103 of 1976 by incorporating in clause
      (ab) of section 2 of the Central Sales Tax Act, 1956 does
      not affect the position. In this connection reference may be
      made from the observations of this Court in Burmah Shell Oil
      Storage Ltd., where it has been held that customs barrier does         G
      not set a terminal limit to the territory of the State for sales-tax
      purposes. Sale, therefore, beyond the customs barrier is still a
      sale within the State. The amendment introduced in section
      2 by the Act 103 of 1976 does not affect the position because
      the custom station is within the State of Tamil Nadu. That
                                                                             H
1148            SUPREME COURT REPORTS                           [2020] 1 S.C.R.


 A           question might have been relevant if we were considering
             the case of sale by the transfer of documents of title to the
             goods as contemplated by section 5 of the Central Sales-
             Tax Act. In the premises we are unable to accept the contentions
             urged on behalf of the appellants in the civil appeals and also the
             contentions urged in the writ petition.
 B
             37. In the view we have taken, it is not necessary to express our
             opinion on the arguments whether introduction of clause (ab) of
             section 2 of Central Sales Tax Act by Act 103 of 1976 is
             prospective or not. We have, however, noted the submissions.
             That question, in the light of our aforesaid views, is not material
 C           for the present controversy.”
                                                             (emphasis supplied)
              12. Applying the principle underlying the said decision, it is clear
       that the sale to be in the course of import, must be a sale of goods and as
 D     a consequence of such sale, the goods must actually be imported within
       the territory of India and further, the sale must be part and parcel of the
       import so as to occasion import thereof. Indeed, for the purposes of
       Customs Act, only upon payment of customs duty the goods are cleared
       by the Customs authorities whence import thereof can be regarded as
       complete. However, that would be no impediment for levy of sales tax
 E     by the State concerned in whose territory the goods had already landed/
       unloaded and kept in the bonded warehouse. For seeking exemption, it is
       necessary that the goods must be in the process of being imported when
       the sale occurs or the sale must occasion the import thereof within the
       territory of India. The word “occasion” is used to mean “to cause” or
 F     “to be the immediate cause of”. In the present case, the stated sales in
       no way occasioned import of the goods into the territory of India. For,
       the goods were taken away by the foreign-going ship as ship stores for
       being consumed after the goods had crossed the customs frontiers/Indian
       Waters.

 G             13. Indubitably, the sale which is to be regarded as exempt from
       payment of sales tax, is a sale which causes the import to take place or
       is the immediate cause of the import of goods. The appellants having
       failed to establish that the stated goods would be actually imported within
       the territory of India and had not crossed the customs station, cannot
       contend that the sale was in the course of import as such within the
 H     meaning of Section 5 read with Section 2(ab) of the CST Act. Moreover,
     NIRMAL KUMAR PARSAN v. COMMISSIONER OF                                    1149
   COMMERCIAL TAXES & ORS. [A. M. KHANWILKAR, J.]

there is no direct linkage between the import of the goods and the sale in     A
question to qualify as having been made in the process or progress of
import. We may usefully advert to Section 5 of the CST Act, which
reads thus: -
      “5. When is a sale or purchase of goods said to take place
      in the course of import or export.-(1) A sale or purchase of             B
      goods shall be deemed to take place in the course of the export of
      the goods out of the territory of India only if the sale or purchase
      either occasions such export or is effected by a transfer of
      documents of title to the goods after the goods have crossed the
      customs frontiers of India.
                                                                               C
      (2) A sale or purchase of goods shall be deemed to take
      place in the course of the import of the goods into the
      territory of India only if the sale or purchase either occasions
      such import or is effected by a transfer of documents of
      title to the goods before the goods have crossed the
      customs frontiers of India.                                              D

      (3) Notwithstanding anything contained in sub-section (1), the last
      sale or purchase of any goods preceding the sale or purchase
      occasioning the export of those goods out of the territory of India
      shall also be deemed to be in the course of such export, if such
      last sale or purchase took place after, and was for the purpose of       E
      complying with, the agreement or order for or in relation to such
      export.”
                                                      (emphasis supplied)
      14. The crucial question is whether the stated sales can be deemed       F
to have taken place in the course of import of the goods into the territory
of India before the goods had crossed the customs frontiers of India,
which is the core requirement of Section 5(2) of the CST Act. The
expression “crossing the customs frontiers of India” has been defined in
Section 2(ab) of the CST Act, which reads thus:-
                                                                               G
      “2. Definitions.- In this Act, unless the context otherwise requires,-
                 xxx              xxx               xxx
      (ab) “crossing the customs frontiers of India” means crossing
           the limits of the area of a customs station in which imported
           goods or export goods are ordinarily kept before clearance          H
           by customs authorities.
1150              SUPREME COURT REPORTS                                   [2020] 1 S.C.R.


 A                     Explanation.- For the purposes of this clause, “customs
                       station” and “customs authorities” shall have the same
                       meanings as in the Customs Act, 1962 (52 of 1962).”
              This definition refers to the expression “customs station”, which
       in turn, refers to “customs port”, “customs airport” and “land customs
 B     station”, as defined in the Customs Act. We may usefully refer to Sections
       2(10), 2(11), 2(12), 2(13) and 2(29) of the Customs Act, as applicable
       for the present cases, which read thus:-
              “2. Definitions.- In this Act, unless the context otherwise requires.-
              (10) “customs airport” means any airport appointed under clause
 C            (a) of section 7 to be a customs airport;
              (11) “customs area” means the area of a customs station and
              includes any area in which imported goods or export goods are
              ordinarily kept before clearance by Customs Authorities;

 D            (12) “customs port” means any port appointed under clause (a)
              of section 7 to be a customs port 15[, and includes a place appointed
              under clause (aa) of that section to be an inland container depot];
              (13) “customs station” means any customs port, customs airport
              or land customs station;
 E            xxx                              xxx                            xxx
              (29) “land customs station” means any place appointed under
              clause (b) of section 7 to be a land customs station;”
              In addition, we may also refer to Section 7 of the Customs Act,
       which postulates appointment of customs ports, airports etc. The same
 F     reads thus:-
              “7. Appointment of customs ports, airports, etc.- The Central
              Government may, by notification in the Official Gazette, appoint-
                  (a) the ports and airports which alone shall be customs ports
 G                    or customs airports for the unloading of imported goods
                      and the loading of export goods or any class of such goods;



       15
          Inserted by Act 11 of 1983, sec. 46 (w.e.f. 13-5-1983) – applicable to C.A. No. 7864/
 H     2009
       NIRMAL KUMAR PARSAN v. COMMISSIONER OF                                             1151
     COMMERCIAL TAXES & ORS. [A. M. KHANWILKAR, J.]

           16
                [(aa) the places which alone shall be inland container depots             A
                   for the unloading of imported goods and the loading of
                   export goods or any class of such goods];
           (b) the places which alone shall be land customs stations for
                the clearance of goods imported or to be exported by land
                or inland water or any class of such goods;                               B
           (c) the routes by which alone goods or any class of goods
                specified in the notification may pass by land or inland
                water into or out of India, or to or from any land customs
                station from or to any land frontier;
           (d) the ports which alone shall be coastal ports for the carrying              C
                on of trade in coastal goods or any class of such goods
                with all or any specified ports in India.”
       We have no hesitation in accepting the argument of the
respondents that being a taxation statute, strict interpretation of these
provisions is inevitable. Going by the definition of “customs port” or                    D
“land customs station” as applicable in the present cases, it is customs
port or land customs station area appointed by the Central Government
in terms of notification under Section 7. It is not the case of the appellants
that the bonded warehouses, where the goods were kept and the stated
sales took place by appropriation of the goods thereat, were within the                   E
area notified as customs port and/or land customs station under Section
7 of the Customs Act. As the stated goods had travelled beyond the
customs port/land customs station at the relevant time, in law, it would
mean that the goods had crossed the customs frontiers of India for the
purposes of the CST Act. Resultantly, the legal fiction created in Section
5(2) of the CST Act will have no application.                                             F
       15. Notably, the expressions “warehouse” and “warehoused
goods” have been defined in the Customs Act in Sections 2(43) and
2(44) respectively. As per the applicable provisions at the relevant time,
“Warehouse” means a public warehouse appointed under Section 57 or
a private warehouse licensed under Section 58. “Warehoused goods”                         G
means goods deposited in a warehouse. As aforesaid, there is nothing to
indicate that the bonded warehouse, where the stated goods were kept
by the appellants and eventually sold, formed part of the customs port/
16
  Inserted by Act 11 of 1983, sec. 47 (w.e.f. 13-5-1983) – applicable to C.A. No. 7864/
2009                                                                                      H
1152             SUPREME COURT REPORTS                           [2020] 1 S.C.R.


 A     land customs station. If so, the legal fiction of sale being deemed to have
       taken place in the course of import of the goods into the territory of India
       would have no bearing and applicability to the present cases.
              16. To get over this position, emphasis was placed by the appellant
       on the exposition in the Indian Tourist Development Corporation
 B     (supra), which had considered the situation where the goods were kept
       in the bonded warehouse and were made available in the duty-free shops
       for sale. This Court opined that since the goods were supplied to the
       duty-free shops situated at the International Airport, Bengaluru for sale,
       it cannot be said that the said goods had crossed the customs frontiers of
       India. We fail to understand as to how this decision will be of any avail to
 C     the appellants. For, the Court was not dealing with a situation as in the
       present cases, in which the goods had crossed the customs port/land
       customs station area and kept in the bonded warehouse, where the sale
       by appropriation of the goods was effected. Indeed, in paragraph 17 of
       the reported decision, the Court in the facts of that case, has observed
 D     that when the goods are kept in the bonded warehouse, it cannot be said
       that the said goods had crossed customs frontiers of India. However,
       the Court finally answered the claim of the appellants therein on the
       finding that the liquor, cigarettes, perfumes and food articles were sold
       “at the duty-free shops” at the International Airport, Bengaluru, for which
       no tax was payable by the appellants as the goods sold at the duty-free
 E     shops were sold directly to the passengers and even the delivery of
       goods took place at the duty-free shops before importing the goods or
       before the goods had crossed the customs frontiers of India. The issue
       considered in the said decision, therefore, was whether the sale at the
       duty-free shops situated at the Bengaluru International Airport would
 F     attract levy of sales tax. As noticed earlier, the definition of “customs
       station” clearly refers to customs airport as defined in Section 2(10) of
       the Customs Act. As the duty-free shop is situated in airport area, it
       would mean that the sale of goods at the duty-free shops was deemed to
       have taken place in the course of import of the goods into the territory of
       India. Thus understood, the reported decision under consideration is of
 G     no avail to the appellants.
              17. Even the exposition of the Constitution Bench in J.V. Gokal
       (supra) that a sale by an importer of goods after the property of the
       goods passed to him, either after the receipt of the documents of title
       against payment or otherwise, to a third party by a similar process is also
 H     a sale in the course of import, would equally have no bearing on the
        NIRMAL KUMAR PARSAN v. COMMISSIONER OF                                  1153
      COMMERCIAL TAXES & ORS. [A. M. KHANWILKAR, J.]

present cases. In as much as, the sale of goods must take place before          A
the goods had crossed the customs frontiers of India, which means it
was within the customs port/land customs station area. Nothing is shown
by the appellants herein to substantiate that the subject bonded warehouse
came within the customs port/land customs station area and moreso the
stated sales occasioned import of the goods within the territory of India.
                                                                                B
If so, the finding of fact and conclusion recorded by the authorities below,
which commended to the High Court, is unexceptionable.
      18. This Court in K. Gopinathan Nair and Ors. vs. State of
Kerala17 has expounded the factors to be reckoned for determining
whether the concerned sale or purchase of goods can be deemed to
have taken place in the course of import. The relevant portion of the           C
aforesaid judgment reads thus:
          “14. In the light of the aforesaid settled legal position emerging
          from the Constitution Bench decisions of this Court the following
          propositions clearly get projected for deciding whether the
          concerned sale or purchase of goods can be deemed to take place       D
          in the course of import as laid down by Section 5(2) of the Central
          Sales Tax Act:
             (1) The sale or the purchase, as the case may be, must actually
             take place.
                                                                                E
             (2) Such sale or purchase in India must itself occasion such
             import, and not vice versa i.e. import should not occasion such
             sale.
             (3) The goods must have entered the import stream when they
             are subjected to sale or purchase.                                 F
             (4) The import of the concerned goods must be effected as a
             direct result of the sale or purchase transaction concerned.
             (5) The course of import can be taken to have continued till
             the imported goods reach the local users only if the import has
             commenced through the agreement between foreign exporter           G
             and an intermediary who does not act on his own in the
             transaction with the foreign exporter and who in his turn does
             not sell as principal the imported goods to the local users.
             (6) There must be either a single sale which itself causes the
             import or is in the progress or process of import or though        H
17
     (1997) 10 SCC 1
1154             SUPREME COURT REPORTS                           [2020] 1 S.C.R.


 A               there may appear to be two sale transactions they are so
                 integrally inter-connected that they almost resemble one
                 transaction so that the movement of goods from a foreign
                 country to India can be ascribed to such a composite well
                 integrated transaction consisting of two transactions dovetailing
                 into each other.
 B
                 (7) A sale or purchase can be treated to be in the course of
                 import if there is a direct privity of contract between the Indian
                 importer and the foreign exporter and the intermediary through
                 which such import is effected merely acts as an agent or a
                 contractor for and on behalf of Indian importer.
 C
                 (8) The transaction in substance must be such that the
                 canalizing agency or the intermediary agency through which
                 the imports are effected into India so as to reach the ultimate
                 local users appears only as a mere name lender through whom
                 it is the local importer-cum-local user who masquerades.”
 D
              19. It will also be useful to advert to paragraph 6 of Kiran Spinning
       Mills (supra), which reads thus:
             “6. Attractive, as the argument is, we are afraid that we do not
             find any merit in the same. It has now been held by this Court in
 E           Hyderabad Industries Ltd. v. Union of India that for the purpose
             of levy of additional duty Section 3 of the Tariff Act is a charging
             section. Section 3 sub-section (6) makes the provisions of the
             Customs Act applicable. This would bring into play the provisions
             of Section 15 of the Customs Act which, inter alia, provides that
             the rate of duty which will be payable would be (sic the rate in
 F           force) on the day when the goods are removed from the bonded
             warehouse. That apart, this Court has held in Sea Customs Act,
             SCR at p. 803 that in the case of duty of customs the taxable
             event is the import of goods within the customs barriers. In other
             words, the taxable event occurs when the customs barrier is
 G           crossed. In the case of goods which are in the warehouse the
             customs barriers would be crossed when they are sought to be
             taken out of the customs and brought to the mass of goods in the
             country. Admittedly this was done after 4-10-1978. As on that
             day when the goods were so removed additional duty of excise
             under the said Ordinance was payable on goods manufactured
 H           after 4-10-1978. We are unable to accept the contention of Mr
             Ramachandran that what has to be seen is whether additional
        NIRMAL KUMAR PARSAN v. COMMISSIONER OF                                  1155
      COMMERCIAL TAXES & ORS. [A. M. KHANWILKAR, J.]

          duty of excise was payable at the time when the goods landed in       A
          India or, as he strenuously contended, they had crossed into the
          territorial waters. Import being complete when the goods entered
          the territorial waters is the contention which has already been
          rejected by this Court in Union of India v. Apar (P) Ltd. decided
          on 22-7-1999. The import would be completed only when
                                                                                B
          the goods are to cross the customs barriers and that is the
          time when the import duty has to be paid and that is what has
          been termed by this Court in Sea Customs case (SCR at p. 823)
          as being the taxable event. The taxable event, therefore, being
          the day of crossing of customs barrier, and not on the date
          when the goods had landed in India or had entered the                 C
          territorial waters, we find that on the date of the taxable event
          the additional duty of excise was leviable under the said Ordinance
          and, therefore, additional duty under Section 3 of the Tariff Act
          was rightly demanded from the appellants.”
                                                        (emphasis supplied)     D
       20. A priori, for a sale or purchase to qualify as a sale or purchase
in course of import, the essential conditions are that such sale shall occur
before the goods had crossed the customs frontiers of India and the
import of the goods must be effected or the import is occasioned due to
such sale or purchase. In the present case, the sales in question did not       E
occasion import.
       21. Arguendo, for sale or purchase of goods to be regarded as
sale or purchase in course of export, Section 5(1) of the CST Act provides
for the following conditions: (i) the sale or purchase shall occasion such
export or (ii) the sale or purchase shall be effected by a transfer of          F
documents of title to the goods after the goods have crossed the customs
frontiers of India.
       22. A Constitution Bench of this Court in Md. Serajuddin and
Ors. vs. State of Orissa18 has held that expression ‘in the course’ implies
not only a period of time during which the movement is in progress but          G
postulates a connected relation. The relevant portion of the judgment is
extracted as under:
          “18.     ….. A sale in the course of export predicates a
          connection between the sale and export. No single test can be
18
     (1975) 2 SCC 47                                                            H
1156             SUPREME COURT REPORTS                           [2020] 1 S.C.R.


 A           laid as decisive for determining that question. Each case must
             depend upon its facts. But it does not mean that distinction between
             transactions which may be called sales for export and sales in the
             course of export is not real. Where the sale is effected by the
             seller and the seller is not connected with the export which
             actually takes place, it is a sale for export. Where the export
 B
             is the result of sale, the export being inextricably linked
             up with sale so that the bond cannot be dissociated without
             a breach of the obligations arising by statute, contract, or
             mutual understanding between the parties arising from the
             nature of the transaction the sale is in the course of export.
 C           In the Nilgiri Plantations case (supra) this Court found that the
             sales by the appellants were intended to be complete without the
             export and as such it could not be said that the sales occasioned
             export. The sales were for export and not in the course of export.”
                                                             (emphasis supplied)
 D           23. It is relevant to advert to the definition of export here. Section
       2(18) of the Customs Act defines export as follows:
             “2. Definitions.- In this Act, unless the context otherwise requires,-
                 xxx                      xxx                       xxx
 E           (18) - “export”, with its grammatical variations and cognate
             expressions, means taking out of India to a place outside India.”
                                                             (emphasis supplied)
              24. In the present case, it is not the case of the appellant that the
       goods in question were being exported. Since the goods are to be
 F
       consumed on the board of the foreign going ship and the same would be
       consumed before reaching a destination, it does not fall under the
       definition of ‘export’. The sale cannot qualify as a sale occasioning export
       unless the goods reach a destination which is a place outside India.
       Further, since the goods have been sold from the bonded warehouse and
 G     had crossed the customs port/land customs station prior to their sale, it
       cannot qualify as a sale in course of export within the meaning of Section
       5(1) read with Section 2(ab) of the CST Act.
              25. In regard to the contention that declaration under Section 69
       of the Customs Act was made by the appellant, there is nothing on record
 H     to show that such declaration was made in respect of the goods pertaining
     NIRMAL KUMAR PARSAN v. COMMISSIONER OF                                     1157
   COMMERCIAL TAXES & ORS. [A. M. KHANWILKAR, J.]

to subject sale(s). Even otherwise, the benefit extended under the              A
Customs Act of waiver of customs duty cannot be taken as waiver of
sales tax under the relevant state and central laws. Similarly, insertion
of sub-Section (3) in Section 5 of the CST Act in 1976 does not affect
these cases because the bonded warehouse where the stated sales or
appropriation of the goods occurred is within the land-mass of the State
                                                                                B
of West Bengal and not shown to be within the customs station area.
       26. A priori, it must be held that the stated sales or appropriation
of goods kept in bonded warehouse within the land-mass/territory of the
State of West Bengal are neither in the course of import or export and
more so, were effected beyond the customs port/land customs station
area. Therefore, in law, it was a sale amenable to levy of sales tax under      C
the 1954 Act and the 1994 Act, as the case may be, read with Section 4
of the CST Act. As a result, these appeals must fail, as we find no
infirmity in the view taken by the authorities below and which had justly
commended to the High Court.
      27. In view of the above, these appeals are dismissed with no             D
order as to costs. Pending interlocutory applications, if any, shall stand
disposed of.


Ankit Gyan                                                 Appeals dismissed.
                                                                                E




                                                                                F




                                                                                G




                                                                                H